Worried about my level of savings

[Sportbilly]

Is it normal to be worried about my financial state of affairs.

My current financials are below, can somebody advise (clearly I want to arrange to see an IFA) on their thoughts on what level of savings somebody in my age bracket should have accrued.

My details are :-

Age 43

ISA savings 2k. (Did have 50k but all went on a house deposit and furniture etc).
Pension circa 200k
No other savings
Mortgage 250k balance
No other debt outside of a 10k car loan
I do have income protection insurance

Other than my pension pot which I feel is decent, my gut feel is I am way behind the game compared with my peers of a similar age.

It sounds good to me. You have your own home, no debt and a healthy pension. A great position to be in.

You think so? My own home is debatable as 250k is a big old chunk of mortgage to pay off.

Almost no debt (car and house aside) is ok but my big concern is I am not say on 3 to 12 months of expenses for a rainy day....do most people have this?

I would look carefully at how much you are paying into your mortgage. For most people it’s more sensible to rent and put the extra cash into investments but obviously in some areas it’s much cheaper to pay a mortgage than it is to rent even factoring the lost income that the deposit cash could have generated. Ultimately it’s no a question of cash value but how much income can expenditure you will have going forwards.

Most people have naff all savings...I'd say you're sitting well above average.

I'd say your doing very well! I too am 43 live in a rented house which I can't see ever changing bar a miracle and live month to month with zilch savings and no pension! I think you'll survive .....

Are single? (So no partners savings to fall back on?).

I’d work on building your savings up if you have any spare money as that’s not much at all and could easily be wiped out if you get a big bill.

We had no savings until we hit our 50s.
Once you pay off your mortgage you'll have at least £300k equity in your house. Try to increase your mortgage payments now. Even an extra £50 a month will make a big dent in the term of the loan.

Depends on who your ‘peers’ are.

You're doing well to have something in savings at all I think. We're still in the clearing debts phase of our financial situation. Until we can do that we won't have anything in savings really, which makes me more than a bit nervous sometimes.

I think you need to calculate your net worth, so your assets minus your liabilities. You have a mortgage of £250k which is big on a £300k property but not so big on a £1million property... so how much is the property worth, thus can calculate how much of the asset is in your net worth.

I'm 44. My ISA is bigger than your's but my pension is a lot smaller.

It's normal to be worried but your situation seems fine. At least on paper.

I've never heard the advice Boggles has given previously. It sounds counterintuitive to me, but I know naff all about this. Just would have thought that paying off a mortgage eventually = no further property costs to pay and/or potential to dow size and release cash vs paying rent forever more and hoping the investments outpace property rental increases.

I would probably like more of my mortgage to be paid off at 43, but I suppose it depends on its value.

Other than that I think you sound like your doing ok and better than the average I think.

How exactly do you calculate what your pension 'pot' is?

My works pension forecasts only ever illustrate what (little) I'll get annually at 60 or 65.

My position is very similar. Early 40s; mortgage of £120000; pension approx £200000; car loan £10000; savings £3000. I would feel happier if mortgage was lower and savings higher (I do worry about it). If we had stayed in our old house we would have been almost mortgage free by now but I’m hoping longer term this was the best decision for our family lifestyle at present and will give us options if we want to retire early and downsize to release some money. Time will tell if we made the right decision.

Maybe ask the IFA if you need to rebalance between the medium term savings (i.e. 3 months salary in the bank) and your pension. Looks like you're prioritising retirement over being made redundant for ex and then not finding another job for a long while.

Although if work are matching your pension savings then it's tricky to turn down free money on top of the great tax £ advantage of pension savings...

I'm not an IFA but I would:-

• reduce pension payments a little until I had 3 months bet salary in an ISA.
• find extra savings by being frugal and challenging myself to have no spend days, asking whether I really needed x or y
• cancel any unneeded subscriptions
• make lunches to save money everyday (& reduce plastic etc!)
• stop worrying about it :) not everyone has such a good pension pot by 43! You've done well

It’s hard to comment without knowing :

• your income. Also is your job secure and are you likely to be able to continue doing it ? How much can you add to savings before retirement?

• value of house. £250k is a big mortgage if house worth £300k & I’d say that’s not a great position, but if house worth £1.3m then it’s amazing. Could you downsize to release equity if you needed to in future?

If you can make some savings e.g.) not eating out, cheaper holidays etc you might be able to slightly overpay the mortgage. Every little helps with such a long-term and high amount loan

I take it you've looked at Moneysavingexpert website? I might be preaching to the converted!

Ah I see you have IP, scratch what I said re redundancy.

What's the house worth? Do you have children?

House is worth 300k. I know I should be in a better position house wise but had a heavy loss on a prevous home (bought at house price peak and forced to sell due to relocation...in a town where prices dropped massively).

Income 70k to 80k dependent on bonuses.

2 kids.

Also was diagnosed with a serious (slow burning) illness and had a couple of mad years where I spent like there was no tomorrow.

I see why you are concerned you are not in the same position as your peers if the people you know earn similar wages to you. Most don’t and will never expect to. I think given time you will be able to achieve reasonable savings again. You are in a better position than you think.

To be honest, I’d be worried with no savings that you can access right now. I mean the ISA doesn’t count as it’s for longer term and you don’t want to have to cash it it and lose the tax free benefit.

What will you do if the car or boiler breaks down, the roof needs repaired or you lose your job?

How do you pay for holidays and other big purchases ?

I think you need more instant savings

Can you save more each month or would it be taking away from pension? Tbh even if it meant reducing pension, I'd still rather have emergency money for things like boiler breaking down.

If your illness is slow burning, I would concentrate on getting my mortgage paid off and securing your home first, as in a few years you don't know where your illness will take you and how long your earning capacity will continue at the same level.

When calculating the 3 months emergency savings, don't forget that will probably be when you are on a war footing, with things cut right back to the bone.

All the variable bills (food, utilities etc) can be lowered, if you are unemployed there may be lower commuting costs or professional wardrobe costs. General travel can be lowered

So a 1 months "normal" living budget could well be 3 or more months "emergency" budget.